Investor Sign-On and Capital Commitment Process
‍The VPF will be available through the Equitybee platform in the main directory listing of available offers. Click the VPF tile to view the offer page and reserve your allocation. You will be prompted to complete your investment account and review/sign the investment documents. Once approved by the Broker Dealer, you will be approved for the investment. Upon closing of the Fund, the wire instructions will be shared through the platform.

‍The investment account should be established in the name of the individual or the entity that will be making the investment. For instance, in the case of a Trust, the Trustee should sign up as the investor and create the investment account as a Trust. Specifically, the Trustee would select "Entity" for the first section and then select “Revocable Trust” or “Irrevocable Trust”, depending on how it is set up. The Equitybee team would be happy to hop on a call to walk you through the process if interested.

Target fund life: 5 years
‍Investment period: ~12-18 months
‍Annual Management Fee: None
‍Brokerage Fee: 5% applied when capital is deployed to each underlying investment
‍Carried interest: 10% applied at the VPF level
‍Minimum commitment per investor: $100,000

Equitybee is a marketplace to bring investors and employees needing stock option funding together. Equitybee gives investors access to these startup companies by funding employee stock options.

The secondary market allows VC funds and other stakeholders that invested in the company in the very early stage the opportunity to realize their investment before a potential initial public offering (IPO). So, venture investors are selling earlier investments at later stage valuations. When investing in a secondary, you directly own equity in the company and are represented on the cap table.
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Investing with Equitybee allows you to invest in later stage companies, but at earlier stage valuations, via vested employee stock options. The investment is in the form of a variable forward contract, and at the time of a successful liquidity event, the employee pays the investor the relevant proceeds. You own an interest in the forward contract, not in the underlying stock. The employee retains ownership of the equity throughout the process, but may choose to settle in publicly traded shares after a liquidity event.

The VPF will be passively managed; Equitybee will not actively pick companies for the Fund. Equitybee will manage the VPF in a manner similar to an index fund of pre-IPO companies. The VPF aims to provide investors with exposure to a broadly diversified portfolio of 100+ pre-IPO companies invested at discounts to the last known common share price, driven by Equitybee’s proprietary multi-trial simulation model. Importantly, the traditional venture capital model (i.e., less diversified, access constrained portfolios) relies on a small number of investments to generate a fund’s vast majority of returns (this is known as Power Law). However, research shows that larger portfolios (100+ companies) tend to increase the likelihood of generating higher returns and decrease the dispersion of returns.

VPF will have exposure to at least 100 portfolio companies and the maximum investment allocation is 1% per portfolio company.

At any given moment, Equitybee will keep a list of target companies and associated deal terms which meet the VPF’s investment criteria. During this period, the offer will not be available for investment through the Equitybee platform and, if fully allocated, may not ever be available for investment by platform investors. Importantly, in case an offer matches the investment criteria of more than one managed fund, the Fund which added that company to their target list first receives priority. Equitybee will periodically refresh and revise the VPF’s target list to account for changes in the marketplace which may impact a target company’s eligibility to the investment criteria. Finally, if the offer is not fully invested by any of the existing funds, it will be posted to the equitybee.com platform and become available for investment by platform investors. For instance, if an employee needs $200k of which VPF may only contribute $85k for diversification purposes, other funds / platform investors will have the opportunity to fund the remaining $115k.

The model does not assume that fund distributions will be reinvested into VPF (i.e., there is no capital being recycled here). In fact, the model assumes that every dollar generated by the strategy through liquidity events will be immediately distributed. The VPF will make distributions to investors on a regular schedule, pursuant to the Fund’s Operating Agreement.

For each iteration of our Monte Carlo simulation, the model generates (1) hypothetical portfolio investments randomly distributed within the Fund's investment period (deal terms are also randomly generated based on Equitybee's historical deal flow), and (2) random exit events based on historical return distributions across economic cycles. Finally, we've stress-tested several model inputs, including (1) optimal portfolio size, (2) optimal portfolio mix across company stages, (3) investment period, (4) fund term, (5) historical return distributions, and (6) historical median time for portfolio investments to exit.

The model does not assume that Equitybee will  filter out the bottom quartile performers. As mentioned before, the model randomly generates exit events for each individual portfolio investment based on historical return distributions. 

Equitybee is a well known company in the employee option funding space, and with an estimated $30 billion worth of options going unfunded each year, there is plenty of supply.  Because of our leading position in the field and the huge amount of options needing funding each year, it is a matter of matching supply with our investor demand.  We have presented over 1,700 investment opportunities to our investor community, valued at $200M+.

*Source: Total Offers/$ Supply (2020 - 2023)

Due to the fact that the VPF will be funding employee stock options via a forward contract, and not purchasing the actual shares, the employee is obligated to pay back the original investment amount, interest, and a portion of the gross proceeds before they are permitted to keep any proceeds from a successful liquidity event. As such, VPF will enjoy liquidation preference over the employee.

Assuming your fund meets all compliance/regulatory requirements, including accredited investor qualifications, it shouldn't be a problem. We may require additional details as the Fund intends to rely on the Section 3(c)(1) or Section 3(c)(7) exemption from registration under the Investment Company Act of 1940, as amended. Please start the signup process and select the relevant entity type.

Yes. Other funds / platform investors can provide capital to the same employee. 

If the shares of a private company are freely transferable, then it will be considered a liquidity event, which is defined as an acquisition, merger, initial public offering (IPO), or any other event at the company that allows shareholders to cash out some (or all) of their shares. Otherwise, the employee is not able to settle the agreement, and it is not considered a liquidity event. In other words, upon a liquidity event, if an employee gets paid with shares of a private company that aren't transferable, the position will remain open until that employee can transfer / sell the shares and settle the agreement.

At a company level, Equitybee has a robust Business Continuity Plan in place that covers the business from multiple angles. Additionally, legally speaking, VPF operates under a Delaware limited liability company, which is a standalone entity, distinct from Equitybee Inc. and its subsidiaries. In an unlikely scenario of Equitybee going out of business, a new manager would be appointed and VPF would continue to exist/operate regularly. In short, from a business continuity perspective, the capital in VPF is not at risk nor would VPF's performance be impacted.

No. Our framework allows employees to bypass their employers’ consent. That said, historically, we have seen employers being very supportive of their employees working with Equitybee as this is a way for them to participate in the success of the companies they’ve helped build.

No, we don't require employees to use their own cash. However, note that some employees choose to self-fund a portion of their options while using funding from Equitybee to fund the remaining amount. 

Yes. Equitybee’s fund manager will process and distribute K1s to investors on an annual basis (if applicable).

The capital provided by VPF to startup employees cover both the exercise costs and associated taxes.

Yes. VPF is open to international investors as long as they meet all compliance/regulatory requirements, including accredited investor qualifications.

Our mission is to empower startup employees to participate in the success of the companies they helped build. While receiving employee stock options should be a life-changing financial opportunity, the value of these options remain inaccessible and illiquid until an exit event. In addition, employees who leave their company prior to an exit often can't afford the exercise cost. We’re here to fix this problem. By utilizing our global investor network, employees can get the funding they need to exercise their options and become shareholders in their companies. At the same time, we give employees the ability to create liquidity for some of their equity immediately, without forfeiting their ownership. This gives startup employees a unique opportunity to truly take control of their financial futures. 

We accept funding requests from employees of high-growth, VC-backed startups. These requests are presented as investment opportunities to our global network of investors, who provide employees with the funding they need. In exchange, employees agree to share a portion of the future stock value with the participating investors following a successful exit.

To date, we've helped over 2,000 startup employees exercise their stock options and become shareholders. Our platform features hundreds of leading startups across a wide range of industries, including fintech, artificial intelligence, education, healthcare, cleantech, and others.

Yes, many of the employees who received funding from our investor network have experienced successful exits at the companies they helped build. Examples include XM Cyber, Vdoo, Siemplify, TinyTap, Totango, Avanan, Innovid, Finaro (formerly Credorax), ironSource, Riskified, Global-e, Taboola, Outbrain, Payoneer, SentinelOne, WalkMe, Otonomo, Arbe Robotics and many more.

Equitybee was founded in 2018. Since then, our community has grown to over 40,000 startup employees and accredited investors worldwide. We operate in both the United States and in Israel.

Equitybee was founded by childhood friends Oren Barzilai, Oded Golan, and Mody Radashkovich, who have a combined 45 years of experience in the technology and finance industries. After seeing many of their friends and colleagues lose out on a significant part of their compensation because they couldn’t afford to exercise their stock options, Equitybee’s founders started this company to help startup employees own their hard-earned shares.

We’re backed by top-tier VCs like Group 11, Greenfield Partners, Battery Ventures, and Zeev Ventures.

Securities on our platform are offered through EquityBee Securities, LLC, a broker dealer registered with the U.S. Securities and Exchange Commission (SEC), a member of FINRA (Financial Industry Regulatory Authority), and a member of SIPC (Securities Investor Protection Corporation). Equitybee Advisors is the investment advisor to the VPF and owes a fiduciary duty to the funds it manages. Equitybee Advisors is an exempt-reporting advisor. Exempt Reporting Advisers are investment advisers that are not required to register as an adviser with the SEC or state regulators, but must still report public information via the IARD/FINRA system.You can learn more about these entities at brokercheck.finra.org.

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A liquidity event is an acquisition, merger, initial public offering (IPO), or any other event at the company that allows shareholders to cash out some or all of their shares.

Following a successful liquidity event, the VPF will receive its principal, interest, and a portion of the stock value. When a liquidity event occurs at a price per share less than the investment price per share, VPF first receives all available funds to recoup the original investment amount. The employee will not receive any proceeds in this event. The employee has the option to settle in either cash or shares after the end of any applicable lockup period. If VPF receives shares after a liquidity event, the Manager will first sell the shares before distributing cash to investors.

Employees have a contractual agreement to settle the transaction immediately after a successful liquidity event, subject to any lockup period, if applicable. That being said, funding employee stock options carries the counterparty risk that the employee breaches their contract. In the event of a breach of contract, we would take legal action to force compliance with the contract terms.

If the portfolio company goes out of business, the Fund will not receive its initial investment back, or any accrued interest. The Fund will mark the position to zero.

If the portfolio company goes out of business, the Fund will not receive its initial investment back, or any accrued interest. The Fund will mark the position to zero.